Japan's Intraindustry Trade Dynamics

Menon, Jayant

doi:10.1006/jjie.1996.0360

Cited by 4 publications

(1 citation statement)

References 14 publications

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“…Recently, there have been a few studies focusing on East Asian trade relationships (see e.g. Brulhart and Thorpe, 1999;Drysdale and Garnaut, 1993;Hu and Ma, 1999;Menon, 1996Menon, , 1997Rajan, 1996;Thorpe, 1997). However, the present study tends to address the overall trade relations of countries in the region and uses a dynamic measure of IIT using disaggregated data sources.…”

Section: Introductionmentioning

confidence: 99%

Study of the Measurement and Determinants of Intra-industry Trade in East Asia*

Thorpe

Zhang

2005

Asian Econ J

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The present paper investigates the development of intra-industry trade (IIT) among the East Asian economies over the 1970-1996 period. A dynamic index is used to capture the changes in the structure of trade flows. Based on this approach, IIT is decomposed into horizontal (HIIT) and vertical components (VIIT) and the determinants of each are investigated. The results show that both HIIT and VIIT have exhibited increased importance over the sample period in manufacturing. Using pooled panel data the two-way trade in all measures of IIT is found to be positively related to the country-specific variables, such as the market size, exhange rate depreciation, the levels of development and income, and negatively to the geographic proximity of the partners. Economies of scale are seen to have a positive influence on IIT and HIIT, but a negative relationship with VIIT. Although the relative openness of a country's trade regime shows no significant relationship with any form of IIT, a trade imbalance does affect IIT and HIIT flows. The findings have implications for assessing the structural adjustment costs associated with the trade liberalization process as HIIT is associated with demand for variety and relates to two-way trade in goods of similar quality, while VIIT is driven by international specialization and differences in relative factor endowments.

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